GDP per capita: calculation methodology

The abbreviation of GDP stands for gross domestic product, which today is the main indicator of economic development. This coefficient is determined from the accounting of the market price of all created goods and services on the territory of the state for a period of time, which, as a rule, is equal to a year. With the growth of the indicator, taking into account inflation, one can speak of an increase in the economy, an increase in the volume of services and production. Therefore, almost all world countries are striving to increase GDP.

In addition to the general, economists operate with another important indicator - the per capita GDP of the countries of the world, which is calculated by dividing the total value of manufactured goods (GDP) by the number of people in a country. This indicator is primarily used for an adequate comparison of the economic development of different states, taking into account the number of people. For example, Russia has per capita GDP in 2011 at $ 16,687. The country ranks 46th in the world rating according to the assessment of the World Bank.

GDP per capita is calculated in dollars, taking into account the parity of the purchasing power of the state currency, in other words, not the exchange rate of the national currency but the quantity of services and goods that can be purchased are taken into account.

With GDP per capita, another important indicator is linked: labor productivity. However, in this case the method of calculation is somewhat different: they divide the value of all goods by only the number of working citizens, and not the entire population.

Some economists are critical of the calculation of GDP per capita, they say the unreality of this indicator. Disputes cause the legality of including in the calculation base the cost of services and goods that were produced in the territory of the state by companies that have head offices abroad.

In order to avoid disagreements, another indicator of the country's economic development is calculated in parallel: the gross national product. This factor takes into account only those services and goods produced by organizations belonging to national capital.

GDP is divided into potential, actual, real or nominal. The last indicator is expressed in the prices of the current year, the real figure is calculated at the prices of the previous year, taking into account the correction for inflation.

The actual value of GDP is determined by the incomplete employment of people in the country, and the potential value - with full employment of the entire population. The difference between the indices is the representation of the real capabilities of the country's economy or the overestimated potential ones.

Three methods of determining per capita GDP are used: distribution production and final use. The first take into account the amount of factor income (profit organizations, interest, rent and wages). This method includes the income of all business entities residing in the territory of the state, which are residents and non-residents.

Adding value is used to find GDP using the production method . Through the received indicator, a monetary assessment of all goods and services produced in the country for a year is carried out. Only the added value is taken for the settlement base - the difference between the firm's revenues and the costs of the intermediate (costs for the production of services or goods). In this case, you can not twice take into account the goods that make up the final product.

The end-use methodology takes into account costs. In this case, GDP determines consumer spending of the population, net exports, government spending on services and goods, as well as investment in production.